Emulation, indebtedness and income distribution: A monetary theory of production approach

Guglielmo Forges Davanzati () and Andrea Pacella

European Journal of Economics and Economic Policies: Intervention, 2010, vol. 7, issue 1, 147-165

Abstract: The aim of this paper is to study the effect of emulation within a basic schema of the monetary theory of production (MTP). A theoretical model is presented, where workers set their target level of consumption based on the comparison with other workers taken as reference. It is shown that emulation can play a crucial role in increasing workers’ propensity to indebtedness. As a result, profits increase and so does the price level, thus generating a decline of the real wage. Moreover, the existence of indebtedness can provide a further solution to the socalled »paradox of profits« within the MTP.

Keywords: monetary circuit; emulation; indebtedness; profits; wages (search for similar items in EconPapers)
JEL-codes: D71 E12 E21 J31 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:elg:ejeepi:v:7:y:2010:i:1:p:147-165

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